No Change In Fed Policy, Yellen Signals

Since every word that the head of the Federal Reserve utters is closely watched by those in the financial markets, it's worth noting that in her first appearance before Congress since being confirmed Fed Chair Janet Yellen plans to say Tuesday that:

"I expect a great deal of continuity in the FOMC's approach to monetary policy."

Her "as prepared for delivery" testimony before the House Committee on Financial Services is posted here. Should you wish to watch the historic first testimony from the central bank's first female chair, C-SPAN3 will be webcasting when the hearing begins at 10 a.m. ET.

Speaking about the Fed's plan to continue scaling back on the amount of stimulus it's giving the economy, Yellen says in her testimony that:

"If incoming information broadly supports the committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the committee will likely reduce the pace of asset purchases in further measured steps at future meetings. That said, purchases are not on a preset course, and the committee's decisions about their pace will remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases."

Translation: The "committee" — Fed policymakers — will continue to reduce the amount of money the Fed is injecting into the economy if inflation remains in check, economic growth remains OK and jobs continue to be added to payrolls.

None of this is a surprise, by the way. Yellen has been the Fed's vice chairman, so she's been there for its policy-making meetings, and during her confirmation hearing she gave no sign that she would diverge from the path set by her predecessor, Ben Bernanke.

As for the current state of the economy, Yellen plans to tell Congress that:

-- "The economic recovery gained greater traction in the second half of last year."

-- She and other Fed policymakers "anticipate that economic activity and employment will expand at a moderate pace this year and next, the unemployment rate will continue to decline toward its longer-run sustainable level, and inflation will move back toward 2 percent over coming years."

If Yellen says anything today that rattles financial markets, she'll get a second chance to smooth things over on Thursday when she repeats her testimony before the Senate Banking Committee.